Lawstreet Journal

Investor Consent Needed for Winding up Debt Schemes: Karnataka HC to Franklin Templeton India

Lawstreet Journal 26 Oct 2020 11:00pm

Image courtesy: Lawstreet Journal Judiciary Investor Consent Needed for Winding up Debt Schemes: Karnataka HC to Franklin Templeton India

Today i.e. 24th October 2020, the High Court of Karnataka restrained Franklin Templeton (FT) India's decision from winding up its six debt schemes without obtaining the consent of unitholders. This is said to be a major victory for all the investors.

The order from the court was in replyto the petitions which challenged the winding-up of six debt fund schemes of FT. The bench consisted of 2 judges: Chief Justice A S Oka and Justice Justice Ashok S Kinagi. In their order, they directed that trustees should not take any action on the winding up of the six schemes until the simple majority consent of unit holders is obtained.

This division bench gave a 330-page order which stated as follows, “We hold that no interference is called for in the decision of trustees to winding up of the said schemes. We hold and declare that the decision of the trustees to winding up the six schemes cannot be implemented until consent from the unitholders is obtained in accordance with Sub Clause C of Regulation 15. Hence, we restrain the trustees to take any further steps based on the notice 23 April 2020 and 28 May 2020, issued until the consent of the unitholders is obtained. It will open for trustees to obtain the consent of unitholders and to take further steps."

A more active role should be played by SEBI in the matter and it had failed in its duty towards taking prompt actions according to the observations made by the Court. The… Continue Reading...

Tagged: Franklin Templeton  
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